US Market Limbo until 02 Apr 2025 ?
From Now to 2nd April.
According to strategists at $Goldman Sachs(GS)$ - US stock market may struggle to gain meaningful traction over the next two weeks.
GS attribute this to the lingering uncertainty surrounding upcoming tariffs, which are expected to take effect on 02 Apr 2025 (7 working days later).
With markets waiting for clarity on these levies, major stock indexes are likely to lack clear direction in the near term.
Uncertainty between ‘now’ (23 Mar 2025) and two weeks later means it is going to be difficult for US market to rally substantially over a short window.
Despite this, GS thinks it's good news for the market that investors may have already priced in a significant tariff increase.
Uncertainty remains on what will happen after the announcement, though.
Investors need to prepare for possible tariff changes and pay close attention to official updates, including Trump’s tweets & comments via his truth social platform.
Apart from Goldman Sachs' views, some believe big market gains will become limited after 2 Apr 2025.
Traders are focusing on two important Friday-dates:
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21 Mar 2025: Options expiration, a short-term risk event.
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18 Apr 2025: April options expiration, seen as a key date.
Another School of Thoughts.
Interestingly, there is another off-shoot, school of thoughts.
Shifts in market are significant & interesting, when pessimistic Wall Street analysts suggest to their clients that US stocks are looking like a “Buy”, despite on-going market volatility.
For the record, on Fri, 21 Mar 2025 - the S&P 500 did manage to eke out a marginal gain of +0.082% and in the process avoided a 5th straight week in the red.
Notably, several previously bearish analysts suggested US market might rebound soon, although their overall negative long-term outlook remains.
Three Analysts.
According to Stifel, Analyst, Barry Bannister:
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He has one of the lowest year-end targets for the S&P 500 on Wall Street.
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He predicts it will end FY 2025 at around 5,500.
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Sharing with MarketWatch (Thu, 20 Apr 2025), he would not be surprised to see a “relief rally” that would carry the S&P 500 back to around the 5,850 level by the end of Q2 2025.
That does not mean Bannister is giving up on his 5,500 target.
After a handful of more-bullish strategists cut theirs over the past couple of weeks, Bannister said in his latest report that he would be standing firm.
For now, Bannister believes that falling bond yields TMUBMUSD10Y 4.25% have spooked stock investors. (see above)
Falling yields could be a sign that bond traders are bracing for a recession.
For now, at least, Bannister does not see one on the horizon.
Bannister recommended that long-term investors interested in putting money to work now consider defensive sectors:
Utilites.
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$NRG Energy Inc(NRG)$ - This company ranks among the best performing utilities stocks in 2025. YTD it has a +8.53% gain. Past 30 days, it lost -2.68% - fairly stable.
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$Suburban Propane Partners LP(SPH)$ - Another best performing utility stock in 2025. YTD it has a +17.54% increase. Past 30 days it lost -2.30%.
Healthcare.
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$GRAIL, Inc.(GRAL)$ - YTD this company has a +69.03% gain. Past 30 days it lost -33.13% though.
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$Eli Lilly(LLY)$ - YTD this grand dame has a +7.65% increase. Past 30 days it lost -4.97%, holding its value well.
Having said that, he acknowledged that when US market recovers, usually companies that were leading the market before, often gain the most.
As for BCA Research, Chief global strategist - Peter Berezin:
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Coming into 2025, he expected the S&P 500 to fall to 4,450 by the end of the year.
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It is the lowest target among his peers, and even lower than Bannister’s.
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On 14 Mar 2025, in his report to clients he decided to play devil’s advocate and discuss what could go right for the market in 2025.
Berezin outlined five scenarios that could boost stocks this year:
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President Trump could walk back and reduce his tariff agenda, caving to market pressure.
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Bond yields could remain stable despite plans for unfunded tax cuts.
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Fiscal stimulus and structural reforms eg. like reducing barriers to trade within the European Union, could boost Europe’s economy.
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Increased US oil production could lower gas prices for consumers.
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Artificial intelligence might provide a greater productivity boost than expected.
Lastly, Societe Generale, Strategist, Albert Edwards :
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Acknowledged the possibility of a short-term stock market rebound.
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In a LinkedIn post, he shared a SentimenTrader model showing a sharp drop in bullish sentiment and suggested that investor pessimism might now be overdone.
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Noted that the extreme shift toward negative sentiment could support a temporary market bounce.
The notion that stocks might be due for a bounce is not so far-fetched.
According to Dow Jones Market Data, the S&P 500’s 14-day relative strength index (RSI) has dipped below 30 last week. (see below)
Thankfully, the popular momentum gauge has recovered somewhat this week, as stocks rallied following Wed, 19 Mar 2025 Fed’s FOMC meeting.
Also, the SentimenTrader model is not the only indicator suggesting bearish sentiment may have gone too far, adding to the case for a potential rebound.
On Thu, 20 Mar 2025, the weekly survey published by the American Association of Individual Investors showed that nearly 60% of respondents expected stocks to fall over the next six months, marking the 4th straight week with sentiments at or around that level.
On Fri, 21 Mar 2025, FactSet data showed that US stocks eked out a marginal gain after initially opening lower.
By the time US market closed for the week: (see above)
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DJIA: +0.08% (+32.03 to 41,985.35).
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S&P 500: +0.08% (+4.67 to 5,667.55).
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Nasdaq: +0.52% (+92.43 to 17,784.05).
In summary, while we strategically rebalance our holdings to be recession proof, there are short or medium term gains to be had, if we look hard enough. Start acting before 02 April 2025.
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